McLaren-Mercedes divorce and Cosworth need a new partner.

Even though the driver line up’s are mostly sorted for next year, I suspect there are a few exciting news stories yet to break. One of which I believe will be the split between Mercedes and McLaren.

History of the partnership

Having been out of F1 since 1954, Mercedes returned as an engine supplier in 1994, partnering with Sauber and then a year later began their 17 year relationship with McLaren. Since parting company with Honda in 1992, McLaren tried working with both Ford and Peugeot for 2 years with limited success. The 5 year relationship with Honda had delivered both WDC and WCC championships in 4 of those years – 8 titles in all and in just 5 years – 52 pole positions and 44 wins. In stark contrast Mercedes partnership with McLaren has delivered a mere 1 WCC (1998) and 3 WDC titles (Hakkinen 98,99 – Hamilton 08).

In 1999 Daimler-Chrysler (owner of Mercedes-Benz) bought 40% of the McLaren F1 team with Ron Dennis and Mansour Ojjeh each retaining 30% and there was a shareholders agreements which locked Dennis and Ojjeh’s holding together so they could not be sold independently of one another. The arrangement followed a decision by DaimlerChrysler and McLaren Cars to jointly develop and produce the Mercedes-Benz SLR McLaren super sports car which was launched at the Frankfurt Motorshow in 2003 and was manufactured at the McLaren Technology Centre in Woking and at the company’s second production factory in Portsmouth, where the SLR carbon fibre bodyshells are built. The programme was planned for 7 years and around 3500 cars and the last cars were completed by December 2009, although McLaren produced 25 limited edition run of cars in 2011 called the ‘McLaren Edition’.

Daimler-Chrysler appointed a new chairman in 2006 Dieter Zetsche, and he set about turning around the decade long slide in the company’s fortunes, completing the de-merger with Chrysler in 2007. On the horizon was the completion of the supercar programme and what may succeed it. At the time there was talk that Zetsche would expand McLaren production in the future and therefore attempt to buy out Dennis and Ojjeh so they could bring the technology in-house and have greater control of all projects. At that time Mercedes was the only major manufacturer involved in F1 that did not to control its works team and there is no doubt that McLaren performance in recent years has been generally disappointing, despite a strong World Championship challenge in 2005.

The Ron Dennis’ Dream

Yet Ron Dennis did not want to sell out to Mercedes, he wanted to turn McLaren into the British answer to Ferrari, so he and Ojjeh sold shares in McLaren the enterprise to investors from Bahrain in 2006, much to Mercedes displeasure. The spy-gate scandal of 2007 and Dennis’s announcement of McLaren Automotive (Dennis’ dream road car operation) in 2009 ultimately killed off the relationship as Mercedes realised that they had not only lost the chance to buy the McLaren Company but also gained a competitor in the sports car market. Mercedes immediately bought the Brawn GP team, which would be renamed Mercedes GP. It was announced that Dennis would acquire Mercedes shares in McLaren from them over a fixed period ending upon the completion of the contract in 2012.

The deal is shrouded in mystery, but holding the upper hand on matters like – not allowing Mercedes to advertise the success of Brawn GP – insiders believe McLaren probably recovered its 40% stake in a deal that paid them something in the region of $300m and also provided F1 engines free of charge for the 2 years until the new engine regulations were due in 2013. This may sound wildly expensive for Daimler AG but they are the kind of figures that would be expected given the company’s apparent desire to get out of the arrangement. The windfall for McLaren would give them the money they needed to invest in their own engine programme so they can pursue the strategy of becoming a totally independent car manufacturer, promoting its products in Formula 1.

Manufacturing Competitors

To further the very British image for the McLaren sports car company Dennis’ wanted to create, they appointed of Jenson Button to race alongside Lewis Hamilton at the end of 2009. McLaren had examined the possibility of signing Button for 2008 but choose Heikki Kovalainen instead. The team also recruited British test drivers Gary Paffet and Oliver Turvey to continue the image.

McLaren unveiled its first road car rival to Mercedes in September 2009 – the MP4-12C. Ricardo, a comapny specialising in engine and transmission design helped McLaren develop their first ever engine, the M838T. This is built at Ricardo’s new engine assembly facility in West Sussex but is badged ‘McLaren’. Some 1800 orders for the MP4-12C had been placed by the turn of 2012 and 18 out of a planned 34 worldwide dealers are now in place.

McLaren Automotive has 2 more road car models in the pipeline. The baby McLaren which was originally expected to show this year but will now debut in Geneva 2013 along with the much awaited McLaren P1 Supercar. The baby McLaren is expected to compete with the long-standing Porsche 911 and Mercedes are expected to launch a new car in this space too. The McLaren P1 will challenge the Bugatti Veyron and Ferrari Enzo at the top of the price range. A spokesperson for McLaren said: “It is along the lines of the McLaren F1 so it will have a much higher retail value and we won’t make too many of them so it will be a real collector’s piece.” McLaren have said that it is planning to make the P1 the lightest supercar yet, with a target weight of 1,140kg. It will cost in the region of $1.6m and is said to be able to reach a top speed of around 260mph.

The final divorce and McLaren’s future

Of course Mercedes had the last laugh on the division of the spoils. Following certain voices of dissent within F1, the new engine regulations have been delayed until 2014, this means McLaren will be forced to pay Mercedes for their F1 engines next year. There was no real option to change engine supplier for just one year as the cars’ specifications as set out in the FIA regulations are very similar to this year. Then of course Mercedes pulled off a coup which all the F1 voices of ‘reason’ said would not happen or was not logical – they recruited McLaren’s child protegé and team winning WDC, Lewis Hamilton.

It’s not clear what McLaren will yet do for 2014. No credible sources have suggested to me that the partnership with McLAren road car engine partner Ricardo has much chance of developing an F1 engine. It was suggested to me today that McLaren may go with Honda for 2013, but I find this incredible and it is most likely even though Mercedes will charge them around $12m they will stick with them next year. Honda, who in a previous partnership with McLaren had meteoric success, have indicated they would like to return to F1, but latest comments from their head of Motorsports indicated this would be beyond 2014. McLaren have surely not yet developed the in-house skills needed to design, test and optimise such a piece of technology to be competitive in time. So where will they turn?

As thejudge13 reported last week, Cosworth are now up for Sale. They have a real F1 heritage having been produced F1 engines since 1963 and winning 155 GP’s. The company has recently successfully diversified into a number of other engineering activities and is not selling out because they are not profitable – unlike Lola. The directors planed to float the company on the FTSE to raise much needed capital to pursue projects like developing new F1 2014 engine designs from the drawing board to completion, but stock market floatations are fraught with trouble in present times. So a trade sale for Cosworth is now imminent, and a little bird told me that McLaren are more than very, very interested. What better to complete the Dennis’ vision of a British F1 racing and sports car marque – A historically successful British F1 team and British engine manufacturer of some class.

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16 responses to “McLaren-Mercedes divorce and Cosworth need a new partner.”

Heard the return to Honda rumors but seemed like the press heard they didn’t want to pay Merc, put 1&1 together and came up with 3. The Cosworth angle makes sense if there is nothing solid on the Honda front.

If McLaren are starting next year to pay Mercedes for their engines it will be interesting to see if they have changed the livery when the 2013 car is unveiled. Maybe no contract specifying a grey/silver colour anymore.

i can see honda for 2014, but 2013 makes no sense at all – why would (a fiscally ultra-conservative) honda design a moribund engine?
i can see mclaren buying cosworth too, whether or not they were to use them for f1 engines.

Great article. Being a McLaren fan since 1990, when I was still a kid, I will not miss Mercedes at all. This are exciting times, as I always felt that, despite the Honda years, more or less the engines were always the weak link in the McLarens. Let’s just hope this transition goes as smooth as possible.

Even better for McLaren if they have take Mercedes engines for 2014 – gives them more time to develop their own/Cosworth, because Renault have been testing physical engines/sections for nearly a year and PURE/Cosworth haven’t built a prototype yet.

As to contractual obligations – they’re about as binding as ‘for better for worse, for richer for poorer’…

I don’t think you’re in business are you? Contracts are binding, and if broken, incur horrendous costs. It’s a contract signed when they split in 2010, for 5 years.

Mclaren will not be building their own engines. That I can promise you. It’s not in the DNA, nor the business plan. Nor the paradigm. There is a few twists and turns to come, but they’ll not arrive for a few years for mclaren….

After I initially commented I appear to have clicked on the -Notify me when new comments are
added- checkbox and now whenever a comment is added I get four
emails with the same comment. There has to be a means
you are able to remove me from that service? Kudos!

As far as I know McLaren and Mercedes have a good relationship, but I wouldn’t be surprised if McLaren decided to use Honda engines in the future. The partnership between these two has been very successful in the past and I strongly believe the two can relive those days…